When anyone starts a new entrepreneurial venture, they generally believe they are starting a business. And by the general definition they are. But as time goes on, reality might say they have just created their own job.
I want to be clear right from the start: whether you have a business or you’ve created a job for yourself, both options are awesome. Every day, you get to do the work you truly love, and someone is paying you for it. That’s great! One path is NOT inherently better than the other, but the key is to know which path you’re on.
Spot the Differences
The number one factor that identifies a business as separate from a job is that you can sell a business to another person. Think about it: if you ran a local coffee shop or bookstore, you could sell that shop to another person and they could keep making coffee or selling books. The business would go on even after you weren’t part of it any more. For this to happen, two key elements must be included within the business: tangible assets for which someone else is willing to pay money and some level of systems in place to keep the business strong (meaning profitable and effective), no matter who’s behind it.
On the other hand if your venture is really more of a job, there are different, but distinguishable characteristics. The two key indicators that you have built yourself a job are first, you contribute to the business in a unique way that is difficult to replicate in someone else and second, generally when you are not working, income is not being generated.
Choose Your Path
In most cases the entrepreneurial venture is really somewhere in between pure business or pure job. But having a clear understanding of both allows you to ask yourself: “Is this what I WANT to be doing?”
People often assume that creating a business is the “right” answer, but it is nowhere near that simple. In many cases creating a job requires minimal capital investment whereas building a business is often capital intensive. Jobs can be highly profitable and personally lucrative but when you retire, the job retires with you. Businesses usually require investment not only in product, but also in personnel. But that also means that at some point, you still earn income in the form of profit distributions without actually having to continue to invest time (or money).
Generally consultants, authors, self-employed designers, teachers, or service providers of any type lean more toward the job side of the scale. Manufacturers, distributors, wholesalers, and retailers usually reside on the business side of the scale. But the separation is far from absolute.
For example, if as a designer you are the major contributor to your brand and product, you may think your only option is the job route. However there are other options. Hire an apprentice. Teach that person your ways, and train them to do what you do. A well-known example of this is Coco Chanel. Although she is long gone, you can still buy handbags and clothing that reflect her unique style.
On the other side, most independent retail shop owners assume they have a business they can sell. However, on further investigation, what actually becomes apparent is they have inventory and possibly some additional assets to sell, but without consistent profit and well documented systems and procedures there really isn’t a viable business.
In some cases entrepreneurs create businesses of both types. For example, consider Abby Glassenberg and Kristin Link, the founders of Craft Industry Alliance (CIA). Abby’s initial business, While She Naps, and Kristin’s initial business, Sew Mama Sew, are each closer to the job end of the spectrum. Their personality, unique knowledge, and individual contribution were and continue to be a strong factor in their success. Does that mean that at the point they want to move on to something else they would have no option but to shut down the business? Absolutely not! But they would have to think about how they transition their personal touch to the next business owner in such a manner that the business value they have built remains with the business entity.
In almost complete contrast is the Craft Industry Alliance, Abby and Kristin’s joint venture. Where their combined insights, skills, and knowledge propelled the CIA to rapid success, their roles and participation could easily be transitioned to other people passionate about building community for professionals in the craft industry. All of this points to CIA being a business. So does this mean they automatically have a sellable business? Not necessarily! The answer is unknown until additional information is gathered about their documentation of systems, business assets, and financial stability and profitability.
The Next Step
If you want a job, and you have a job, you’re all set! Next time, we’ll talk about how to plan an exit strategy so that, when you’re ready to stop doing that job, you can still get something valuable out of it by selling your assets to someone else.
However, if you want to have a business, but you’ve realized you’re not there yet, it’s time to make some changes. The key to having a business you can sell is to make sure that it has a strong, solid foundation including tangible assets, documented systems, and processes that can be replicated by someone other than just you, and a business model that produces consistent income and profit. Unfortunately, there is no magic wand to make all of this come to pass. It will take time, focused effort, and probably a few mistakes along the way.
So build a business or create a job, which is the right answer? You are the only one that can answer that question for yourself. But understanding the difference and making a conscious decision about which direction to choose will undoubtedly make you more successful, whatever path you select.
Gwen is a business consultant focused on the craft industry. For more information on how she helps her clients build profitable businesses, and to get more down-to-earth, put-in-the-hard-work business advice visit http://gwenbortner.com/